KPMG Chief Economist Predicts Solid, Not Spectacular Payroll Gains in February 2026

Diane C. Swonk, KPMG chief economist, said in a March 2, 2026 employment primer titled "Payrolls poised for solid, not spectacular gains" that KPMG forecasts U.S. payroll employment for February 2026 and expects gains that are solid rather than extraordinary. The March 2 primer frames the near-term jobs outlook without providing a specific February headcount in the excerpt released.

KPMG's September 29, 2025 note supplies concrete monthly benchmarks the firm has used in recent months: "Payroll employment is expected to rise by 50,000 in September, well within the range to hold the unemployment rate steady at 4.3%." That same September note projected "Average hourly earnings are expected to rise 0.3% in September. That translates to a 3.7% increase from a year ago, the same as in August." The firm also said "hours worked are expected to be unchanged" and "Participation in the labor force is expected to hold steady at 62.3%."

Those September signals flow into KPMG's assessment of how many new jobs are required to keep unemployment stable. "The breakeven for the unemployment rate dropped precipitously between 2024 and the back half of 2025," KPMG wrote, noting that "Last year, the unemployment rate held steady with employment gains of 155,000 per month. This year that breakeven has fallen to between 30,000 and 60,000 per month." KPMG sums the shift succinctly: "The demand and supply of workers have fallen in tandem."

KPMG's sector read identifies specific pockets of upside and downside. "Hiring in the goods sector is expected to rebound a bit, with gains in vehicle production adding to manufacturing," the firm said, and added that "Dealer lots have been drained as vehicle buyers scrambled to buy EVs ahead of the expiration of tax credits on October 1." In contrast, KPMG warned that "Construction employment is expected to remain muted" and that "Home builders remain particularly sour on the outlook for new home construction despite a surge in new home sales in August." The firm also observed that "Most builders will not comment on the role immigration plays in their staffing decisions, but it is an area where wages have accelerated in recent months."

Public-sector dynamics and income flows were flagged as drivers of short-term income gains. KPMG noted that "The bonuses paid to federal workers for homeland security purposes will show up in public sector gains and could amplify income gains in September," and included the snippet "Federal government likely to add jobs." The firm also pointed to demographic behavior as a contributor to recent income: "Younger baby boomers are tapping their Social Security benefits early for fear of losing them, which has shown up as a boost to income gains in recent months."

Taken together, KPMG's March 2 primer and its September 29, 2025 note sketch a labor market where modest hiring in manufacturing and federal pay boosts are offset by muted construction activity and a lower monthly breakeven for unemployment. That mix supports Swonk's central judgment that payrolls for February 2026 are likely to be solid, not spectacular, with the unemployment rate more likely to hold near recent levels than to plunge.